Has the Budget Collapsed?

June 27, 1985

The House-Senate conference on the budget resolution has broken down. There will be no further attempt to get it moving again at least until after Congress returns from the coming recess. That's an ominous sign of growing intransigence in the politics of spending. The choices in budget-making are hard, but no harder this year than they usually are. Congress is already six weeks over the deadline that the law sets (unenforceably) for passage of the resolution. Everybody in the conference argues that badly designed budget cuts can inflict real damage. But a failure to pass a budget promptly and in good order would threaten far greater damage to Americans -- poor, rich and in between.

Both the Senate and the House have passed respectable budget resolutions, and the differences between them lie well within the range of normal compromise. There are no dire collisions of principle here. The reasons for the breakdown lie elsewhere. Both sides want to freeze the tableau to allow you adequate opportunity to appreciate their respective virtues. The House wants you to focus on its unyielding support for the cost-of-living increases in the Social Security benefits. The senators draw your attention to their determination to restrain spending while providing full inflation adjustment to the national defense appropriations.

Since defense and Social Security are the two largest figures in the budget, quarrels over cuts inevitably keep coming back to them. But no skillful negotiator -- and there are many in the conference -- would take seriously the idea that the impasse has to be solved at the expense of only one or the other. The Senate's figure for defense spending next year is only about 2 percent higher than the House's, and it is hard to think that the chasm is unbridgeable. Asfor Social Security, the House is right in opposing cancellation of the cost-of-living increases. Too many of the beneficiaries live close to the edge of poverty, and at that level of income even a modest curtailment in the value of benefits has a severe impact. But there are other possibilities, the fairest of which is to expand the taxation of Social Security income. Half of a beneficiary's Social Security check is already taxable, above a certain threshhold. How about abolishing that threshhold? With only half of the benefits taxable, no one close to poverty would be touched.

Leaders of both houses have done extraordinary things to get the budget resolution to conference. The hardest part of the job has already been accomplished. To allow a deadlock now would risk very unpleasant consequences for the country. Among other things it would increase the chances that interest rates will rise this fall, at a time when the economy is slowing down. If that happens, the costs will be incalculable. The moment has arrived for a fast and firm compromise on the budget.